RAM Ratings reaffirms AAA/Stable rating of Cagamas MBS’s CMBS 2005-2

Published on 30 Aug 2019.

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RAM Ratings has reaffirmed the AAA/Stable rating of Cagamas MBS Berhad’s RM2.06 bil residential mortgage-backed securities (2005/2025) (CMBS 2005-2). Cagamas MBS is a limited-purpose entity incorporated for the purpose of securitising government staff housing loans (GSHLs) and government staff Islamic home-financing facilities.

The rating reaffirmation reflects the fully cash collateralised position of the outstanding RM650 mil CMBS 2005-2 as at end-September 2018. As at the same date, the transaction’s RM754.39 mil of cash and permitted investments were more than sufficient to meet the remaining RM650 mil outstanding balance of CMBS 2005-2’s last two tranches and ongoing interest obligations up to their respective maturity dates. This is attributable to the portfolio’s better than expected performance since issuance, which has helped it accumulate cash reserves. While the transaction allows a partial redemption of the last two tranches of CMBS 2005-2, this option has not been exercised as cash flow arising from excess prepayments has yet to meet the projected amounts, despite having fulfilled the minimum threshold of RM90 mil for the Collections Account. CMBS 2005-2’s portfolio of GSHLs comprised 26,151 accounts, with an average outstanding amount of RM34,954. The weighted-average term to maturity of the CMBS 2005-2 pool stood at 7.93 years.

Under the Budget 2019, civil servants (grade 54 and below) and pensioners received a one-off special payment of RM500 and RM250, respectively, while pensioners receiving pensions of less than RM1,000 were paid an additional one-off assistance sum of RM500. In addition, the government introduced the Bantuan Sara Hidup programme early this year – a tiered cash hand-out scheme depending on the income level of eligible person. That said, we observed no significant impact on current prepayment levels, likely due to the subsidised interest rates of GSHLs as well as persisting inflationary pressures and affordability issues. While the new administration has provided an assurance that the civil service will not be downsized, there had been proposals to reshuffle and reassign civil servants at all levels, which could result in higher incidences of transfers and, in turn, possibly more administrative delays in deductions. During the review period, the respective delinquency profile of portfolios under Cagamas MBS Berhad were generally stable.


Analytical contact
Tan Han Nee
(603) 3385 2529

Media contact
Padthma Subbiah
(603) 3385 2577


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2019 by RAM Rating Services Berhad

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Ratings on Cagamas MBS Berhad CMBS 2005-2